S. JAMES OTERO, District Judge.
This matter is before the Court on Plaintiff Steven Dunner's ("Dunner" or "Plaintiff") Motion for Summary Judgment, filed on October 26, 2009. Defendant University of Southern California ("USC") Long Term Disability Plan ("Defendant") filed an Opposition, to which Plaintiff replied. The Court found this matter suitable for disposition without oral argument and vacated the hearing set for November 16, 2009. See Fed.R.Civ.P. 78(b). For the following reasons, Plaintiff's Motion for Summary Judgment is
For purposes of this Order, the following facts are presumed to be true, unless otherwise stated. On September 13, 2000, Plaintiff suffered an injury during the course of his employment with the County of Los Angeles (the "County"), which resulted in a level of permanent disability (the "County Injury"). (Pl.'s Statement of
"The ... [USC] Plan agreed that [Plaintiff] was disabled[,] pursuant to its terms and agreed to pay him benefits." (Compl. ¶ 11; Def.'s SOF ¶ 5; Petit Decl., Ex. B pp. 44-45, 54-55.) Plaintiff states: "USC has continued to acknowledge [his] disability up through the present, and whether [Plaintiff] is disabled is not an issue in this lawsuit." (Pl.'s Mot. 3.) In August 2008, the workers' compensation claim for Plaintiff's [County] [I]njury reached a conclusion.
Following Plaintiff's worker's compensation award for the County Injury, Sedgwick Claims Management Services, Inc. ("Sedgwick"), the administrator of the USC Plan, took Plaintiff's workers' compensation award for the County Injury as an offset against future benefits Plaintiff would receive under the USC Plan, pursuant to "Reductions Because of Other Benefits Payable," paragraph 3.06 of the USC Plan.
Pl.'s Mot. 6; Def.'s Mot. 7 ("The [USC] Plan took an offset based upon an award of workers' compensation permanent disability benefits to [P]laintiff covering the same time period that [P]laintiff was receiving [USC] Plan benefits."); Petit Decl., Ex. B pp. 38-42. Consequently, Plaintiff has not collected benefits under the USC Plan since December 1, 2008, and was not scheduled to resume collecting benefits until December 2010. (Pl.'s SUF ¶¶ 15, 16.) Plaintiff now complains, however, that "there are clearly two different losses, and the ... [USC] Plan should not be permitted to reduce Plaintiffs current disability benefits because of compensation he received for the [County Injury]." (Pl.'s Mot. 1.)
Following receipt of a letter Plaintiff received from Sedgwick on October 28, 2008 (the "October 28, 2008 Letter"), Plaintiff appealed the USC Plan's determinations. (Compl. ¶ 16; Pl.'s Mot. 7.) Plaintiff asserts that his appeal "provided Sedgwick with a copy of the Reimbursement Agreement[,] which clearly indicated that the offsets should only be taken for other benefits awarded as a result of the `same injury or illness.'" (Pl.'s Mot. 7.) On January 5, 2009, Sedgwick acknowledged Plaintiff's appeal: "We are in receipt of your request to appeal the overpayment on your Long Term Disability Claim. Your letter was received on December 12, 2008." (Compl. ¶ 17.) Sedgwick denied Plaintiffs appeal on January 12, 2009: "As I indicated in my letter to you dated October 28, 2008, the [USC] Plan does not indicate benefits paid is recoverable if you receive a settlement for the same period of time you are entitled to LTD] benefits. The [USC] Plan document is the legal document."
Subsequent to this, Plaintiff filed the instant action, pursuant to 29 U.S.C. §§ 1132(a), (e), (f), and (g) of the Employee Retirement Income Security Act of 1974 ("ERISA"), alleging that the USC Plan made improper reductions in the amount of USC Plan benefits he was owed.
(Compl. ¶ 1.) Plaintiff moved for summary judgment on October 26, 2009, but which the Court denied on December 18, 2009, "[b]ecause factual disputes remain as to the intended purpose of the [USC] Plan's setoff provision, as well as with respect to the injuries Plaintiff allegedly suffered." Order of Dec. 18, 2009; see generally Pl.'s Mot.) The Court instructed the parties to "submit additional briefing regarding the [USC] Plan's language, the intended purpose behind the [USC] Plan, and the injuries for which Plaintiff contends he is entitled to benefits under the [USC] Plan." (Order of Dec. 18, 2009.) The parties submitted additional briefing. (Additional Trial Brief of Def. ("Def.'s Addtn'l Trial Brief") 2.)
Summary judgment is proper where "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Thus, when addressing a motion for summary judgment, the Court must decide whether there exist "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party has the burden of demonstrating the absence of a genuine issue of fact for trial. Id. at 256, 106 S.Ct. 2505. Moreover, when the moving party is the plaintiff, he or she has the burden to demonstrate affirmatively that there is no genuine issue of material fact as to each element of his or her claim for relief, as well as to demonstrate the lack of any genuine issue of material fact as to affirmative defenses asserted by the defendant by pointing out the absence of evidence provided by the defendant. Zands v. Nelson, 797 F.Supp. 805, 808 (S.D.Cal.1992); see also Grimmway Enterprises, Inc. v. PIC Fresh Global, Inc., 548 F.Supp.2d 840, 845 (E.D.Cal.2008).
In deciding a motion for summary judgment, the evidence is viewed in the light most favorable to the non-moving party, and all "justifiable inferences" are drawn in that party's favor. Anderson, 477 U.S. at 255, 106 S.Ct. 2505. Where there is no evidence demonstrating the existence of a genuine issue of material fact, the moving party may prevail simply by "pointing out to the district court ... that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). As the Supreme
"Consistent with established principles of trust law . . . a denial of benefits challenged under [ERISA] . . . is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan."
The interpretation of terms in an ERISA plan is often crucial in determining whether a participant is eligible for benefits under the ERISA plan. Firestone, 489 U.S. at 115, 109 S.Ct. 948. In Abatie v. Alta Health & Life Insurance Company, the Ninth Circuit held that "general trust principles apply when considering how district courts should review ERISA denial benefits cases, because the plan administrator stands in a fiduciary relationship to the plan participants." Abatie v. Alta Health & Life Ins. Co. (Abatie), 458 F.3d 955 (9th Cir.2006). As such, "the starting point is the wording of the plan." Id. at 963. To that end, "when disputes arise, courts should first look to explicit language of the agreement to determine, if possible, the clear intent of the parties." Gilliam v. Nevada Power Co., 488 F.3d 1189, 1194 (9th Cir.2007) (quoting Armistead v. Vernitron Corp., 944 F.2d 1287, 1293 (6th Cir.1991)). Thus, courts interpret terms in ERISA plans "in an ordinary and popular sense," and must not "artificially create ambiguity where none exists." Evans v. Safeco Life Ins. Co., 916 F.2d 1437, 1441 (9th Cir.1990).
Plan administrators therefore discharge their duties "in accordance with the documents and instruments governing the plan." 29 U.S.C. § 1104(a)(1). By requiring that ERISA plans be placed in writing, employees are protected from having plans modified without their knowledge, and administrators are prevented from paying "benefits to persons not entitled to them under the express terms of the plan." Greany v. W. Farm Bureau Life Ins. Co., 973 F.2d 812, 822 (9th Cir.1992) (citing Rodrigue v. W. and S. Life Ins. Co., 948 F.2d 969, 971 (5th Cir.1991)). Additionally,
Nonetheless, in reviewing benefits under a plan, district courts may consider evidence outside of the administrative record in determining the nature, extent, and effect of conflict of interest. See Abatie, 458 F.3d at 955. In Abatie, the Ninth Circuit explained:
Id. at 970. For example, when a plan administrator fails to follow ERISA's procedural requirements, "the court may have to consider evidence outside the administrative record." Id. at 973. As such, in Abatie, the Ninth Circuit held that the district court's refusal to consider "additional evidence—a declaration from [the claimant's doctor]—to prove that [the claimant] had remained totally disabled continuously from the date he left work until the date he died," was made in error. Id. at 974. In Muniz, the Ninth Circuit explained:
Muniz, 623 F.3d at 1297 (internal citations omitted); see Gardner v. Bear Creek Corp., 2007 WL 2318969, *18 (N.D.Cal. Aug. 6, 2007) (citing Mongeluzo v. Baxter Travenol Long Term Disability Benefit Plan, 46 F.3d 938, 943-44 (9th Cir.1995)).
ERISA "allows a claimant to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." Muniz, 623 F.3d at 1294, 1296. Though, "when the court reviews a plan administrator's decision under the de novo standard of review, the burden of proof is placed on the claimant." Id.; see Horton v. Reliance Standard Life Ins. Co., 141 F.3d 1038, 1040 (11th Cir.1998) ("A plaintiff suing under [29 U.S.C. § 1132(a)(1)(B)] bears the burden of proving his entitlement to contractual benefits."); see also Farley v. Benefit Trust Life Ins. Co., 979 F.2d 653, 658 (8th Cir. 1992) (internal citations omitted) ("[W]e agree that it was [the claimant's] burden to show that he was entitled to the benefits. . . under the terms of his plan.").
The USC Plan permits offsets against certain other benefits that claimants may receive. In particular, § 3.06 of the USC Plan provides:
(Pl.'s Mot. 3; Pl.'s SOF ¶ 6) (emphasis added). Plaintiff asserts that because the term "Disability" is capitalized, it is a specially defined term within the USC Plan: "the [USC] Plan document defines `Disability' to mean `the condition for which the Participant is claiming benefits is disabling within the meaning of Title II of the Federal Social Security Act' (after 12 months of benefits have run)." (Pl.'s Mot. 4; Pl.'s SOF ¶ 7.) Second, Plaintiff argues that the language "for the same period of Disability for which benefits are payable thereunder," is intended to be language of limitation: "In other words, `other benefits,' which are not `for the same period of Disability,' may not be taken as offsets." (Pl.'s Mot. 8.)
Therefore, Plaintiff argues that "[t]he language of the [USC] Plan does not permit. . . offset[s] [to] current benefits for other benefits which were awarded for a different loss or injury." (Pl.'s. Mot. 8.) Instead, Plaintiff alleges that it is reasonable and fair to interpret the USC Plan as permitting offsets only for other benefits that stem from the same "loss." (Pl.'s Mot. 10.) To that end, Plaintiff argues that the language at issue is akin to an insurance policy "coordination of benefits" clause, which is intended "to prevent insureds from being compensated twice for a single loss." (Pl.'s Mot. 10; Pl.'s Supplemental Mem. in Response to This Court's Request for Additional Briefing ("Pl.'s Supp. Brief") 2.) In Commerce & Industry Insurance Co v. Chubb Custom Insurance Company, the California Court of Appeal explained: "Insurance policies commonly included other insurance provisions which attempt to limit the insurer's liability to the extent that other insurance covers the same risk." Commerce & Indus. Ins. Co. v. Chubb Custom Ins. Co., 75 Cal.App.4th 739, 89 Cal.Rptr.2d 415 (1999). Plaintiff asserts:
(Pl.'s Mot. 11.) Accordingly, Plaintiff contends that the USC Plan's language is clear—it may only offset "current benefits for other benefits which were awarded for a different loss or injury." (Pl.'s Supp. Brief 2; Pl.'s Mem. 8.)
Plaintiff also relies on Welsh v. Burlington Northern, Inc., Employee Benefits Plan, which held that other benefits received by a plan participant may be offset only where they stem from the same "loss" or "injury" as the present disability. See Welsh v. Burlington N., Inc., Emp. Benefits Plan (Welsh), 54 F.3d 1331, 1338-39 (8th Cir.1995). In Welsh, plaintiff Welsh ("Welsh") injured his lower back while at work, and consequently, moved to another position within the same company. Id. at 1334. Several years later, when dye was injected into his spine for diagnostic purposes, Welsh became totally disabled from "Arachnoiditis." Id. Welsh's employer paid disability benefits for the Arachnoiditis, but then informed Welsh that no further benefits would be made, so that Welsh sued the health insurance plan, "alleging that it was improper for the health insurance plan to use the [Federal Employers' Liability Act] ("FELA") award as
Welsh argued that the damages in the FELA lawsuit and the payment that compensated him for the Arachnoiditis represented two different injuries: one for the loss of wages due to the inability to continue work in a position before he injured his back (partial disability), and the other for compensation received for the loss of wages due to the inability to work at all (total disability). Welsh, 54 F.3d at 1337. The district court concluded that the two injuries were indeed separate, and which the Eighth Circuit found compelling:
Id.
In Welsh, the Eighth Circuit found unreasonable Defendant's claim that it was independently entitled to a setoff under FELA because the health insurance plan contained language that stated that disability benefits are to be reduced "by any amount" paid to the employer under FELA:
Welsh, 54 F.3d at 1338. The court further explained that the disability benefits contract contained no language requiring "the same injury" to be the basis for a setoff of a FELA award against disability payments:
Id. at 1339.
For the reasons articulated by the Eighth Circuit, the Court finds the reasoning in Welsh to be both fair and reasonable.
Finally, Plaintiff asserts that § 3.06 of the USC Plan should be understood in light of the Right of Reimbursement Agreement he entered into with USC, and which was drafted by USC, within its capacity as the Plan Administrator. (Pl.'s Mot. 2, 4, 12; Petit Deck, Ex. B p. 35.) The Right of Reimbursement Agreement includes the following language:
(Pl.'s Mot. 4; Petit Deck, Ex. B p. 35) (emphasis added). To that end, Plaintiff claims: "This [A]greement expressly
Principally, Defendant argues that the offsets at issue were appropriately taken because the workers' compensation award for the County Injury covered the same period of time of disability that Plaintiff was to receive benefits under the USC Plan. (See generally Def.'s Opp'n.) Indeed, the workers' compensation award for the County Injury was intended to cover onward for 418.25 weeks (over eight years) from March 7, 2002, and Plaintiff's benefits under the USC Plan were to begin in November 2002. (Def.'s Opp'n 16.) In other words, Defendant argues that the USC Plan permits offsets for benefits received for the same period of time of disability. (See generally Def.'s Opp'n 16.) In response, Plaintiff asserts that if Defendant "wanted the [USC] Plan to read that offsets were permitted when payable `for the same period of time' it should have written this language into the [USC] Plan." (Pl.'s Mot. 13.) The Court agrees that it is unreasonable to provide for offsets simply because two separate benefits are payable during the same period of time. See Welsh, 54 F.3d at 1338-39 (holding that "it would be entirely irrational to claim, for instance a right to setoff based on an award for an injured foot when the basis for an employee's entitlement to disability benefits was total incapacitation from a stroke unrelated in any way to the foot injury.").
Defendant also argues that Plaintiff suffered no injuries for the purported USC incident. (Def.'s SOF ¶ 37; Finding of Fact & Orders, Sept. 9, 2008.) Defendant cites the Workers' Compensation Administrative Board ("WCAB") opinion, which states: "[Plaintiff] did not sustain injury to his neck, left shoulder, left upper extremity, eye psyche, hypertension and internal [sic] arising out of an occurring in the court [sic] of employment on 9/20/01."
Finally, Defendant argues that the USC Plan is only intended to supplement other benefit sources:
(Def.'s Addtn'l Trial Brief 6.) Defendant therefore contends that "the [USC] Plan was to be a supplement to other benefit sources and not a primary benefit connected to one injury or disease or another to the exclusion of others." (Def.'s Addtn'l Trial Brief 6.) Defendant asserts that Plaintiff's injuries "must be addressed separately before one can determine whether an offset for Workers' Compensation benefits paid covering the same period of benefit payments under the [USC] Plan can be taken is unreasonable and strained." (Def.'s Addtn'l Trial Brief 6.)
In any event, for the reasons that the Court finds Plaintiff's interpretation of the USC Plan persuasive, Defendant's arguments are unpersuasive.
"An administrator must provide a plan participant with adequate notice of the reasons for denial, 29 U.S.C. § 1133(1), and must provide a `full and fair review' of the participant's claim." Abatie, 458 F.3d at 974; see Robinson v. Aetna Life Ins. Co., 443 F.3d 389, 393 (5th Cir. 2006) ("Section 1133 requires an administrator to provide review of the specific ground for an adverse benefit decision."); see Juliano v. Health Maint. Org. of New Jersey, Inc. (Juliano), 221 F.3d 279, 288 (2d Cir.2000). "By requiring that an administrator notify a claimant of the reasons for the administrator's decisions, the statute suggests that the specific reasons provided must be reviewed at the administrative level." Abatie, 458 F.3d at 974. As the Ninth Circuit explained, "an administrator that adds, in its final decision, a new reason for denial, a maneuver that has the effect of insulating the rationale for review, and contravenes the purposes of ERISA. This procedural violation must be weighed by the district court in deciding whether [the defendant] abused its discretion." Id. (holding that "[w]hen an administrator tacks on a new reason for denying benefits in a final decision, thereby precluding the plan participant from responding to that rationale for denial at the administrative level, the administrator violates ERISA's procedures."); see Jebian v. Hewlett-Packard Co. Emp. Benefits Org. Income Prot. Plan, 349 F.3d 1098, 1104 (9th Cir.2003) (internal citations omitted) ("Also, a contrary rule would allow claimants, who are entitled to sue once a claim had been `deemed denied,' to be
Here, Plaintiff asserts: "During the administrative proceedings in this case, Sedgwick's sole justification for taking the offsets was that the workers' compensation benefits were paid over the same period as the disability payments." (Pl.'s Supp. Brief 3.) To that end, Plaintiff argues: "the current `same injury' argument was neither raised in the initial denial letter, nor in the uphold letter on appeal. Rather, the USC Plan waited until well after litigation commenced to raise it," such that "this argument is waived." (Pl.'s Reply 2, 8, 12; Pl.'s Reply to Def.'s Trial Brief 5; Pl.'s Supp. Brief 3.) Plaintiff also argues that it was not afforded a "full and fair" review of an adverse benefit determination, pursuant to 29 C.F.R. § 2560.503-1(h)(1). (Pl.'s Opening Trial Mem. ("Pl.'s Mem.") 7.) Finally, Plaintiff claims that the October 28, 2008 Letter was an "adverse benefit determination" because it resulted in a reduction of benefits. 29 C.F.R. § 2560.503-1(m)(4); Pl.'s Mem. 7. As such, Plaintiff asserts that the USC Plan should have provided him with "a description of the [USC] [P]lan's review procedures and the time limits applicable to such procedures." 29 C.F.R. § 2560.503-1(g)(1)(iv). Yet, Plaintiff complains that "[t]he October 28 [2008] [L]etter made no attempt whatsoever to do this." (Pl.'s Mem. 7.) Plaintiff appealed, thereby providing Sedgwick "with a copy of the Reimbursement Agreement," which Plaintiff asserts, "clearly indicated that the offset should only be taken for other benefits as a result of the `same injury or illness.'" (Pl.'s Mem. 7.) Plaintiff argues that Sedgwick's January 12, 2009 response denying his appeal: (1) failed to refer to the "specific plan provisions on which the benefit determination is based;" (2) failed to inform Plaintiff of his right to receive and inspect documents; (3) failed to inform Plaintiff of the right to bring an action under § 502(a) 29 C.F.R. § 2560.503-1(j)(4); and (4) failed to include the mandatory statement that Plaintiff could contact his state insurance regulator of the Department of Labor ("DOL"). (Pl.'s Mem. 7.)
The Court declines to address Defendant's arguments that were not raised during the administrative proceedings, pursuant to Jebian. See Jebian, 349 F.3d at 1104. Defendant is therefore limited to arguing that it was entitled to take offsets from the workers' compensation benefits, which were paid over the same period as the USC Plan payments, because it argued this during the administrative proceedings. However, as already explained, the Court finds this argument unpersuasive in light of the plain language of the USC Plan, as well as in light of the well-formulated reasoning in Welsh. Nonetheless, the Court now turns to whether Plaintiff has met his burden in establishing that he suffered two separate and distinct injuries, for purposes of the USC Plan.
As explained above, the purpose of the USC Plan's offset provision is clear; it exists to prevent a claimant from receiving a double recovery for the same loss or injury. Thus, Plaintiff must show that he sought benefits for a separate and distinct injury suffered while working for USC. If Plaintiff provides evidence that he suffered two separate and distinct injuries (one for the County Injury, and one for the USC Injury), the burden shifts to Defendant to
Plaintiff argues that the workers' compensation award for the County Injury is "clearly for a different `loss' than the USC disability award, as it was awarded for an injury that pre-dated [Plaintiff's] employment at USC and his coverage under the USC Plan." (Pl.'s SOF ¶ 21; Pl.'s Reply 7; Pl.'s Mem. 11; Petti Decl., Ex. B p. 63.) Plaintiff asserts that the workers' compensation award for the County Injury was based on a physical injury to his lower back and leg, "while the disability from USC stemmed from an injury to his cervical spine (i.e. neck), as well as hypertension and depression." (Pl.'s Reply 8.) To that end, Plaintiff claims that the County Injury award was intended to compensate him for his reduced future earnings capacity, whereas the "current [USC] Plan benefits are intended to compensate him for being unable to work at all." (Pl.'s Reply 14.) Plaintiff relies on the medical findings of Dr. Rah, which found that the County Injury caused injury to his lumbar spine and left leg. (Petti Decl., Ex. B p. 63.) Dr. Rah stated on November 27, 2001:
(Fairman Decl. Ex. 9.) Plaintiff asserts that by contrast, the USC Injury related to his cervical spine, hypertension and depression, and which Dr. Kramer explained: "Patient has been experiencing headaches, unstable blood pressure, anxiety and depression, blurred vision with neck pain and tachycardia which makes it very difficult for him to perform his normal work duties." (Petti Decl., Ex. B p. 52.)
In response, Defendant argues that "[t]he distinction of the different injury and injury predating the claim against the [USC] Plan ignores the fact that [P]laintiff relied on all the medical evidence in the administrative file to seek benefits from the [USC] Plan." (Def.'s Opp'n 16.) Defendant asserts that "Plaintiff was not found to have suffered an upper body injury in the WCAB proceeding he brought against USC." (Def.'s Trial Brief 14.) Defendant further contends that Plaintiff "artfully prepared separate reports minimizing the County [I]njury claim on the USC report and the reverse on the County [I]njury report." (Def.'s Trial Brief 14.) Defendant states:
(Def.'s Opp'n 16.) Defendant further states:
(Def.'s SOF ¶ 36.) Defendant additionally complains: "The distinction between the
Finally, Defendant contests that Plaintiff could sustain the County Injury only a few weeks before the USC injury, and still claim that it is "somehow a different and exempt injury when it comes to determining offsets under the USC Plan benefits." (Def.'s Trial Brief 9; Def.'s Reply to Pl.'s Mem. 3.) Defendant states: "[n]o such restrictive language appears in the [USC] Plan that would allow you to separate an injury from the disability that it caused," and that "[t]he upper body disability versus lower body disability argument is distracting, but should not be persuasive given the true facts of the case." (Def.'s Trial Brief 9; Def.'s Reply to Pl.'s Mem. 4.)
It is clear that the parties dispute whether Plaintiff suffered two separate and distinct injuries. Plaintiff relies on the medical findings of Drs. Rah and Kramer, which indicate that he suffered injury to his lower back and leg while working for the County, and then sustained disability while working at USC, stemming from an injury to his cervical spine, as well as hypertension and depression. (Petti Deck, Ex. B pp. 52, 63.) Defendant seemingly concedes that Plaintiff suffered an injury while working at USC to the extent that it paid Plaintiff benefits, beginning in November 2002. (Petti Deck, Ex. B pp. 52, 63.) Defendant now argues, though, that Plaintiff suffered no injury while he was working at USC, meaning that Plaintiff suffered only one injury, the County Injury.
Accordingly, the Court finds that Plaintiff has met his burden of proof in establishing that he suffered two separate and distinct injuries and his Motion for Summary Judgment is
For the reasons stated above, Plaintiff Steven Dunner's Motion for Summary Judgment is
IT IS SO ORDERED.